10/07/2010 @ 1:04PM20,837 views

Baidu Is A Bulletproof Momentum Buy...For Now

Baidu (BIDU – Snapshot Report) recently hit a new all-time high above $100 on strong second quarter results from late July that included a 13% earnings surprise. With an average earnings surprise of 17% over the last four quarters and rising estimates, BIDU looks like a solid momentum pick.

Baidu is an Internet search company based out of China. The company was founded in 2000 and has a market cap of $35 billion.Our last look at Baidu’s business came on July 22 when the company reported strong second quarter results that came in ahead of expectations.

Second-Quarter Results Revenue for the period was up 74% from last year to $282 million. Earnings also came in strong at 35 cents, 13% ahead of the Zacks Consensus Estimate, where the company now has an average earnings surprise of 17% over the last four quarters.

The company’s strong results were driven by increased spending from existing customers, where revenue per online marketing customer was up 39% from last year.

Baidu also scored big on the expenses front, where its traffic acquisition cost (TAC) fell to 9.7% of revenue from 16% last year. Bandwidth costs were also down, falling to 3.5% of revenue from 4.6% last year.

Awesome Balance Sheet Baidu emerged from the quarter with its pristine balance sheet looking better than ever, with cash and equivalents up $182 million from last year to $610 million with no debt.

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